Dennis Uy, chairman and CEO of Udenna Corp., speaks during a Bloomberg round-table discussion in … [+]
Udenna—the debt-laden oil-to-gaming conglomerate controlled by businessman Dennis Uy—has finalized a deal to sell a 45% stake in the Malampaya gas field to billionaire Enrique Razon’s Prime Infrastructure Capital.
Completion of the deal, which was first announced in June, is subject to consent by the government and state-owned PNOC Exploration Corp., which holds a 10% stake in Malampaya. Udenna will retain a 45% stake in the offshore natural gas field located some 80 kilometers northwest of Palawan island in the West Philippine Sea.
Developed by British energy giant Shell in 1991, the operating license for Malampaya—which has been the sole source of fuel for gas-fired power plants in Luzon, the Philippines’ largest island—is set to expire in 2024. The gas field will be a significant addition to Prime Infra’s growing energy portfolio that includes what could be the world’s biggest solar farm.
“We believe that gas is an important transition fuel in the near-term, reducing the need for baseload fossil fuels like coal,” Razon, chairman of Prime Infra, said in a statement on Friday. “Hence, we intend to accelerate investments on the Malampaya gas field to improve output of existing wells and, if possible, develop new wells in the area once the license extension is secured from the government.”
The transaction (financial details of which weren’t disclosed) comes a week after a default notice from creditors to one of Udenna’s units sent shares of companies linked to Uy—an ally of former President Rodrigo Duterte—tumbling. While the $4 million debt payment was promptly settled on July 25, the incident flagged the conglomerate’s growing debt woes.
Uy borrowed heavily as his companies went on an investment spree after Duterte’s election in 2016, buying controlling a interest in the Malampaya gas project for about $1 billion over two tranches and partnering with China Telecom to build the country’s third mobile carrier in recent years. As his business empire expanded, Udenna sank deeper into the red and the liabilities of the group topped 254 billion pesos ($4.6 billion) as of the end of 2020.
Since then, Udenna has been liquidating some of its assets, selling the company’s shares in logistics firm 2GO Group Inc. to the Sy family’s SM Investments Corp. in June 2021. Razon’s Bloomberry Resorts, operator of the Solaire Resort and Casino in Manila, had agreed in May this year to invest in Uy’s casino resort projects in the central Philippine island of Cebu and at the former Clark Airbase in Pampanga, north of Manila.
Razon has been stepping up investments in casinos, water utilities and renewable energy projects in recent years amid a boom in the business of his flagship port operator International Container Terminal Services Inc. He has a net worth of $5.9 billion, according to Forbes’ real-time data.